US 'must shift away from free trade deals'

Washington, July 23, 2009

President Barack Obama should move US trade policy away from the Bush administration's focus on bilateral free trade agreements to a new approach, a report recommended.

The Bush administration negotiated trade deals with Australia, Chile, Singapore, Morocco and other small and medium-sized countries that caused divisive debates in Congress without yielding much economic benefit for the United States, the report by the Democratic Leadership Council think tank said.

Obama should target new trade talks toward bigger economies like Japan, the European Union, Brazil, India and China and focus on removing barriers in high-wage growth sectors such as health, clean energy, and environmental technology, rather than seeking comprehensive free trade deals, it said.

The White House should 'shift the trade agenda to one that directly supports its top objectives: recovery from crisis, improved relations with the world generally and Muslim states in particular, and developing new, high-tech sources for America's future growth, innovation and high-wage employment,' the DLC said.

But first the Obama administration needs to 'clear the decks' over the next year by working with Congress to win its approval of free trade agreements with South Korea, Colombia and Panama left over from the administration of former President George W Bush, the report said.

It also should quickly finish the Doha round of world trade talks, now in its eighth year, by concluding an overall deal or breaking the negotiations into easier-to-manage component parts, it said.

The report comes as many in Washington and around the world are waiting for the Obama administration to lay out its vision for trade. Last week, US Trade Representative Ron Kirk unveiled plans for increased enforcement of existing trade agreements, but it remains unclear what new trade initiatives the White House will pursue.

In a time when many Americans are worried about job losses, 'the administration needs to be able to explain its trade policy simply and easily. The trade agenda now does not lend itself to that,' said Ed Gresser, director of the DLC's Global Economy Project and author of the report.

The White House, consistent with its goal of improving relations with the Muslim world, also should ask Congress to waive tariffs on goods from large majority-Muslim states such as Pakistan whose main exports -- such as clothing, textiles, shoes and leather goods -- face some of the highest US import duties, Gresser said. - Reuters